Which statement is FALSE regarding the high-low method to approximate a linear cost function?
A)The first step is to plot the historical data points on a graph.
B)Outliers should be removed from the analysis.
C)Draw a line between the representative high and low points.
D)The point at which the line intersects the Y-axis is the estimate of variable costs.

Question

Quizplus · Accepted Answer

The point at which the line intersects the Y-axis is the estimate of fixed costs, not variable costs. The slope of the line represents the variable cost per unit.

Which Statement Is FALSE Regarding the High-Low Method to Approximate